Compound Interest Practice Test 3

Question : 10 of 40

Marks: +1, -0

A bank offers 5% compound interest calculated on half-yearly basis. A customer deposits Rs. 1600 each on 1st January and 1st July of a year. At the end of the year, the amount he would have gained by the way of interest is:

Rs. 123
Rs. 122
Rs. 121
Rs. 120

Validate

Solution:

Total amount

=1600(1+5/{2×100})^2

+1600(1+5/{2×100})

=1600×1681/1600+1600×41/40

= 1681 + 1640 = Rs. 3321
Hence, required interest = 3321 – 3200 = Rs. 121

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